Investment Manager Agreements

Investment Manager Agreements

The agreements between an investment advisor and his client are recalled in an investment management contract. While the advisor has generally recognized his or her own form of agreement, the client must make certain decisions, perhaps wish to negotiate certain points and should in any case understand the basic terms of the agreement. If you are a client, some of the basic conditions to be met are: the agreement or an annex to the agreement should contain the investment policies according to which the account is managed. These guidelines should define not only the investment objective of the account (e.g. B capital increase), but also any investment allocation (e.g. B a target of 60% equity and 40% debt) and restrictions on investment (e.g.B. no more than 20% in foreign securities, only investment debt, no derivatives). You should discuss with the advisor the initial instructions to be given based on your current circumstances and risk tolerances, and regularly check these policies. Investment policies are the main way to control the consultant`s activities, so make sure they are clear and that you are familiar with them. Consultants often invest all or part of their accounts in investment funds, hedge funds, bank funds and other pooled vehicles. These vehicles can be managed by the consultant or by unrelated managers.

Consultants may also enter into contracts with unaffiliated managers to invest all or part of your assets as a separate account. All of these agreements bear their own expenses, which are transferred to your account. They should understand the magnitude and structure of these expenses and consider whether the consultant`s fees are properly offset by the fees paid to the manager of the pooled vehicle or a separate account. You should also be familiar with the care the consultant takes with unrelated managers (in order to avoid Madoff`s situation). The investment management agreement expired on 28 February 2014 and KBR is no longer the company`s investment manager as of the same date. Each investment manager has been appointed in accordance with an investment management agreement concluded with the management company and the company, which may be amended from time to time to ensure the day-to-day management of the company`s investments, subject to the overall supervision and responsibility of the management company. Investment management contracts generally provide that the advisor is not liable to the client for wilful misconduct, bad faith, simple or gross negligence and/or breach of the trust obligation. Some agreements may also provide that the client exempts the advisor from third-party claims.

While you should try to limit these types of rules, consultants tend to oppose significant changes. In addition, consultants are not permitted to limit commitments they would otherwise have under securities laws. The agreement gives the advisor discretion or non-discretion. With discretion, the advisor can create your account without prior consultation with you. In case of discretion, the advisor must obtain your prior consent to each transaction….